Since the release of Bitcoin in 2008, the usage of cryptocurrency also started to explode. A cryptocurrency, usually called crypto, is a virtual or digital currency using distinctly complex code systems to utilize cryptographic protocols. In a much simpler definition, a cryptocurrency is a form of digital payment used to pay for goods and services. Bitcoin, on the other hand, is the most popular type of cryptocurrency and is now widely accepted by most merchants worldwide.
With cryptocurrency going mainstream nowadays, many investors are giving it a second glance. It may appear complex at first, but once you get to understand the basics of crypto investing, you might suddenly consider going for it. Like any other investment, cryptocurrency involves a lot of risks, and if you’re not careful and knowledgeable enough about it, you could end up losing money rather than earning it.
Cryptocurrency Portfolio 101
Before anything else, you’ll need to build a solid cryptocurrency portfolio. Sounds nothing like a usual portfolio, right? Simply put, a cryptocurrency portfolio is a software allowing you to keep track of and manage your online currency investments. When your cryptocurrency portfolio is solid enough, you can effectively analyze real-time data, manage your investments in one place, and also have an update on current pricing trends and any significant market activities.
Having the right crypto investment hub and portfolio is essential in minimizing the risks coming with your crypto investment. If you’re looking for tips on how to build a solid cryptocurrency portfolio, read on to know the fundamentals.
1. Understand The Basics
Your portfolio is where you’ll be tracking and managing your cryptocurrency investments, so crypto experts highly suggest investing in currencies you already understand. It makes sense because it’ll be easier for you to play around with your portfolio. If you’re already familiar with Bitcoin, start from there and build your way through other currencies with investment potentials.
More than 6,000 cryptocurrencies are being traded publicly as of the present, and your portfolio can include several cryptocurrencies depending on your preference as well as the type of portfolio system you’ll be using. Among the largest cryptocurrencies of today aside from Bitcoin are Ethereum, Tether, Polkadot, Stellar, Cardano, and Litecoin. If you’re not familiar with any of these cryptocurrencies yet, make sure you do your research before deciding on which ones to add to your portfolio.
Research can go a long way when it comes to learning the basics and complexities of cryptocurrency. Read thoroughly when you have the time and ask anyone you know who’s into cryptocurrency investments like you are.
2. Diversify Your Cryptocurrency Portfolio
It’s a general rule of the thumb to never put all your eggs in one basket, especially when it comes to investing, and the same rule applies to crypto investments. See to it your portfolio has diversified currencies, so you can analyze their short and long-term growth without having to expose yourself to too many risks. It’s ideal to have at least 3-9 cryptocurrencies to spread out your bets.
Crypto portfolios can split from high to low coin market cap in an instant. And if you’re able to diversify your investments, the risks will be lessened and you can hopefully have enough left in your portfolio to realize or predict prospective earnings in the future.
3. Set A Stop-loss
A stop-loss in crypto investing is highly recommended to set some barriers as it’ll automatically sell your crypto asset the moment it hits a specific price. Since the cryptocurrency market is extremely unpredictable, setting a stop loss could protect your investment from taking a big hit in case prices fall unexpectedly.
Different types of stop loss are available depending on various crypto market scenarios and situations. While it can’t be helped to experience loss at some point, a stop loss is considered helpful for both new and old crypto traders.
4. Stay Updated
Once you’ve mastered the basics and you think you’re ready to start crypto investing, remember to never stop learning. After you’ve successfully built a solid cryptocurrency portfolio, you have to stay updated on the latest cryptocurrency trends and information.
Keep in mind, no matter how established some currencies are, conditions could change, and when they do, it’ll be fast. You have to be on top of your game all the time, so you can make wiser decisions in buying and selling cryptocurrencies.
Managing Your Portfolio
Once your solid cryptocurrency portfolio is ready, your next challenge will be managing it and making it grow. Along the way, you’ll learn priceless lessons to help you in turning into a seasoned crypto investor. The tips above will help you navigate through the path easier.
Be prepared all the time, don’t stop learning, and learn from your mistakes to avoid them in the future. Don’t easily believe cryptocurrency misconceptions, may it be Bitcoin or any other currencies. With a solid cryptocurrency portfolio and the right knowledge, you have a better chance of getting successful in being an investor and trader.
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